Why IdeaStorm and Salesforce Ideas are fads

OK, perhaps you can say I'm biased. I am, after all, in the business of helping firms create sustainable innovation programs, and we do build innovation software. But I think I can raise a few legitimate points about the current wave of excitement about the intermingling of social networking tools and innovation software. The two best examples of these are IdeaStorm and SalesForce Ideas, although there are a number of other content management and collaboration tools offering to serve as innovation tools.

First, let's clarify our language. Having a bunch of people submit ideas to a portal is NOT innovation. That is simply a sounding off process, mostly about the problems that exist with current products or perhaps some incremental innovation ideas about how to change the existing products. While interesting and valuable, that's not innovation. Second, innovation is about being able to take ideas from any source and convert them into new products and services that add value. In the words of one of the IdeaStorm personnel:

I love seeing companies embrace this method of listening and engaging the customers. One caution I would send out to anyone setting up a larger scale idea site is the need for a management back end. You can only imagine trying to sort through and actually work on the almost 9K ideas we have so far without a method for tracking status, assigning owners, etc. Do you know if these other vendors offer the idea management tools as well?

So, while many of these applications can accept ideas from anyone, anywhere, they don't have the facility to manage, distribute, evaluate and process the ideas so that they can become new products and services. If the folks at Dell are seeking idea management tools after a "successful" implementation of their IdeaStorm application, what does that say about the downstream processes and capabilities? After all, anyone who works in innovation will tell you that idea generation is easy - managing, evaluating and maturing ideas is the hard part. We think this is where the actual value in innovation resides - having a process and team that can consistently manage ideas and convert them into new products and services.

Next quibble? The reliance on "wisdom of crowds". The social networking and collaboration engines will tell you in no uncertain terms that this is the best way to identify good ideas. That statement is probably true for problems with existing products and exceptionally near term incremental product changes. What the advocates of "wisdom of crowds" models don't tell you is that the crowd can be easily swayed. Look no further than the election for president. In January Hillary Clinton had a huge popular lead based on prediction markets and polling. If we'd made a decision then based on the "wisdom of crowds" we'd have president Hillary already. Wisdom of crowds and prediction markets fail repeatedly when new information is introduced and when new products, services or people are introduced. Other evaluation and consideration means are necessary when your firm is going to place a big bet on a breakthrough or disruptive idea. While your firm may want feedback on existing products and services, will you outsource your new product and service development to the market? If you do that, how do you differentiate from your competitors who are also listening to the same people?

Another concern about broadbased open innovation? Intellectual property ownership. If an idea is submitted by a consumer or customer, who owns the idea? Has the person submitting the idea done any research to investigate if that idea actually belongs to someone else already? What if the submitter claims rights to the idea or wants royalties? This is not to say that firms shouldn't acquire ideas from external agents, just that there are other, better ways to do this, especially as the ideas become more disruptive or have a higher market potential.

These open suggestion models are interesting but will ultimately run into many of the same problems that doomed the physical suggestion box:

1. Too many ideas are submitted for the teams to manage
2. There is no downstream process for managing ideas successfully
3. The ideas address too many different challenges and issues to manage effectively
4. The ideas usually don't address issues the management team considers strategic
5. There are concerns about the ownership and legality of the ideas

Innovation is more than simply receiving ideas from a broad array of people. Implemented effectively, innovation is a consistent process of gathering ideas, evaluating them, piloting or prototyping ideas and then creating new products, services and business models. If all your ideas come from crowds, then you are following the crowds, not leading them to new markets or new products. As Henry Ford said, "if I had listened to my customers I would have made a faster horse".